Bucharest pivots towards a tenant market for office buildings, vacancy rate could reach 12-13 percent by the end of 2020, says Colliers

The stock of modern office spaces in Bucharest reached nearly 2.7 million square meters last year, up 12 percent compared to the previous year. An additional 700,000 square meters could be delivered over the next two years, which means a 25 percent increase in the current office stock, which will increase competition for attracting new tenants, shows the annual report released by Colliers International. The tenants will thus be in a position of strength in negotiations, and vacancy is expected to climb upwards to 12 percent, maybe even towards 13 percent, by year-end.

Over 365,000 square meters were rented in 2019, up 12 percent compared to the previous year, representing expansions of existing leases, new tenants entering the Romanian market and relocations from the stock of modern buildings. At the same time, lease agreements for 144,000 square meters were signed for office spaces to be delivered in 2020 or in subsequent years.

New office space delivered in 2019 reached about 286,000 square meters, nearly double compared to the 150,000 square meters delivered the previous year, but under the initial estimates of Colliers consultants of  360,000 square meters, as two large projects were postponed for 2020.

The Center West submarket was, by far, the most active, generating close to 100,000 sqm of new leasable office spaces in 2019, so a bit over one third of overall deliveries, with other spaces spread around various submarkets in central locations, the CBD, but also Floreasca – Barbu Vacarescu. The biggest project to come online was the Globalworth-built Renault HQ in the West submarket (47,000 sqm), followed by Vastint’s Business Garden Bucharest (over 41,000 sqm) and Portland Trust’s Expo Business Park (over 38,000 sqm) in the Piata Presei-Expozitiei submarket.

Outside Bucharest, projects totaling 94,000 square meters were delivered in 2019, three quarters being buildings built in Cluj-Napoca (37,000 sqm) and in Timisoara (35,000 sqm), followed by Brasov (15,000 sqm) and Iași (7,000 sqm). This year the stock of office space is estimated to increase by 150,000 square meters in these four cities representing major office hubs.

2020 is set to be a good year for the Bucharest office market, with Colliers consultants predicting demand for around 320,000 square meters, of which 120,000 square meters net office space. As in previous years, IT and financial services companies will be the main drivers of demand in 2020.